Loading...
09-16-2013 Police Peaision Board of Trustees M inutes-Quarterly Meeting September 16,2013 Page 1 of 6 CITY OF EDGEWATER POLICE O < <. CERS' PENSION BOARD OF TRUSTEES QUARTERLY MEETING MINUTES Monday, September 16,2013 CALL TO ORDER/ROLL CALLIDE'TERMINATION OF A QUORUM The Edgewater Police Officers' Pension Board held its{quarterly meeting on Monday, September 16, 2013 in the City Hall Council Chambers at the City of Edgewater, Florida. Members Present: David Arcieri Ferd 11ceb Lawrence beat John Tarr Members Absent: James Morey Plan Attorney: H. I.ee Deliner Consultant.- lack Evatt, 'fie Bogdahn Group Doug Lozen, Foster&Foster Ferrell Jemic, Foster&Foster City Staff: Donna Looney, Personnel Director Jonathan McKinney, Finance Director Chairman Arcieri called the meeting to order at 1:33 p.m.; there was a quorum with four members present.. APPROVAL OF MINUTES -Quarterly Meeting-June 17, 2013 and Special Meeting-July 10, 2013 Member Heeh made a Inotion to approve the winules Qf 1he June 17, 2013 quarterly meeting and the July 10, 2013 special meeting; Member Tarr seconded the notion, which passed unanimously. NEW BUSINESS- Review, discuss and execute TPA Contract- Ms. Looney made comment that during the general pension hoard meeting held today, slight changes were made tin the duties of the pension fund administrator. Ms.Jeruie explained the minor changes. Exhibit"A", on page:7, #2, change process to process and coordinate pension benefits payments monthly and maintain a record of all payments for reconciliation for year-end reporting, 44, change procc,ss to coordinate/monitor. #10 and#11, change to coordinate and monitor. On#21, it should say collect necessary data for the City's audit report. Member Heeh oracle a motion to approve the execulion(?f 1he TPA Contract; Member Tarr seconded the molion, which passed unanimously. Puliw Pension Board o1"Trustees M iciutes-Quarterly Mcct iii g 5epteniher 16,2013 Page 2 of 6 OLD BUSINESS - Buyback of Military and Police Services Ms.Christine stated that Member'Parr questioned the buyback of Military and Police Services at the previous meeting and was not in attendance at the last meeting so this order of business came up again. Member Tarr added the biggest question he had was the cost to calculate the buyback. Mr. Loaen stated the actuary fee is $200.00. Chairman Arcieri asked a questioned to Mr. Definer as to whether you can buyback police volunteer time like a firefighter can buyback there volunteer time. Mr. Dcluier stated that according to section 185 under the division of rules you cannot, you have to be a fulltime police officer as defined in the plan. REPORTS (ATTORNEY/CONSULTANTS) Doug Lozen, Foster& Foster,Actuary Presentation: Experience Study Mr. Lozen presents the actuarial experience study. On page 7, this is a summary of the main assumptions for the plan. Basically for each assumption we looked at what has happened in the past and then created a scenario. If you changed that assumption going forward to mimic the past it shows you what the affect on City funding would be. The assumptions play a very important role because they are targets. The way the plan is funded is partly based on how the future will unfold with regards to certain parameters. In order from most important to less important are invest returns, salary increases, turnover, and when members retire and mortality. Mr. Lozen added that it is very important that we try and have the best estimate cif future experience that we possibly can. That's why we are going to reconunend that we go over this exercise every five(5)years to nine tune. So on ]rage 7, the first row, the current assumption is 59.7%of payroll. Member Heeb commented, so what you are saying is the City pays $5.97 for every ten dollars current on gross wages. Mr. Lozen noted that is correct. If you lowered the assumption from 7.5%to 7%the required City contribution would go from 59.7%to 65.4%. Lowering to 7%would increase the City contribution by 5.7%, in dollar terms it would be about $66,000 per year.The unfunded liability would increase up to$2,154,218 and the funded ratio would drop to 74.0%. If you make the decision to do 7.25%then the City's cost would be around$33,000. Jumping to salary scale, we have to make some guess as to what the officers will make in the future. From the prior actuary we've been using assumption based on age. Mr. Lozen thinks that a salary scale based on service is probably a better gage. On page 4, the table represents the actual history better than the current assumption. In [lie first 5 - 10 years of service you get large increases in pay, you prove yourself, you work up through the ranks and you get some promotions. Later in your career you get lower increases. Mr. Lozen slated that he has looked over what has happened over the last number of years and created this table. Ile thinks this table better reflects what has happened in the past. In the first ten(10)years of service, the average officer gets an increase of 7.5%, and then ten (10) years and later the increases are more like 4.2%, Mr. Lozen said the percentages are based on annual year over year increases on average. He understands the City may have no intention over the next couple of years of given anybody 7.5% increases but this is based on history and the funding is based on all future years. If you adopt this salary schedule and it turns out within the next three years the City really hands out 3 -4%increases you will have generated small gains that will bring the City's funding down at little hit. Foster and Foster's interest and goal is to pick a long term assumption and this table mimics what has happened in [lie past over the long term. Member Heeb commented that the only problern he has is looking back over the last 10 years and recalls there were issues with the police officers and their starting salary compared to other municipalities and the competition for quality people. Ile added that when you look back there were Policc Puision Board of'Trustees Minutes-Quarterly Mccting Scptcmbcr 16,2013 Page 3 of 6 bumps that were higher especially with this group because the starting salaries were bummed up to be competitive. Mr. McKinney stated he had this same discussion with the general and fire pension board. In the last.five(5) years we've average just over a 2%raise City wide which includes the salary step plan we've implemented. Member Heeb asked about starting salaries for police officers, during this same period of time, were they hummed?Mr. McKinney stated yes that was one of things that wasn't done for many years as people received the 2%and 3%raises the starting salaries were not increased. That is something that was looked out when we went into the salary study years ago. Mr. Lozen stated they are looking long term over a 25 year career and typically experience studies really do have to put some weight on what's happened in the past. 'Phis salary scale assumption slightly lowers the City's funding and lowers the 25 year average salary increase. The reason being by loading up the early years higher than it is now but scaling off in the future years, when you lower salary scale at later years you have a bigger impact then increasing it in the early years. Adopting this table actually over a twenty(20)year career average lowers the average from 5.9% to 5.7%because were scaling back on the later years and the impact of City's funding is about 2%of payroll. Mr. Lozen stated you may not get 7.5%going forward and 4.2%after 10 years but he will guarantee you that officers will get more in the first ten(10)years then they will in the next fifteen(15)years or so. Jumped back to page 7 again, on [lie salary scale assumption, there would be a decrease of 2.1%which would be a cost savings to the City of about$15,000 per year. The funded ratio would go up and the unfunded liability would go down about$100,000. Mr. Lozen proceeded to discuss turnover. Turnover is when officers leave before early retirement. The turnover has been pretty close to the assumption. Mr. Lozen recommends that you change the assumption Cram based on age to based on service. Mr. Lozen thinks that officers who start employment at age 25130 years old, there's a greater likelihood they leave employment than somebody who has twenty(20)years of service. Mr. Lozen is recommending that.the board change to a service base turnover schedule. Next, Normal.Retirement Rates this has to do with, when an actuary thinks an officer takes retirement when they first become eligible. Right now the assumption from the old actuary is, when an officer gets to retirement status they take it, but, no sooner than age 47.That hasn't been the behavior here. behavior is page 13; Exhibit E, expected retirement rates at 56%.After that initial year of eligible the current assumption is about 100%take it. The earlier an officer takes retirement that's when you need the most funding. They start it early and they're going to draw it over a longer period of time based on life expectance so, we need to have full funding done for them. If an officer does not take it during the first year of eligible, they defer it at least a couple of years. In fact the second year of eligible no one took it. After that, 113 took it and slowly from there more and more officers took it. Finally based on history once an officer got on average six (6) years into retirement eligible that's when there around early 50's, they said there ready to retire. If the behavior in the future is like the past,you can adopt the right hand column on page 13, proposed retirement rates. What would that do for plan funding, on page 7, normal retirement rates; by adopting the right hand column from page 13, City funding would go down 4.8% of payroll on a dollar basis. That is$57,000 per year and unfunded liability would go down almost $100,000. If you choose to combined assumptions with 7.5%investment return, the City's filnding up 1.5%of payroll and that would be about$28,000 per year. If you choose to combined assumption with 7.0%investment return [lien the City's funding would go up 6.6%of payroll and on a dollar basis about $88,000 per year. On page 8, Entry Age Normal, if you change the cost method the City's cost funding would be 52.7%of payroll, it's currently 59.7°/x. So,simply by changing to cost method and doing nothing else you would lower the City's funding by 7%of payroll and in dollar terms it would be$627,000. You would be saving about$80,000 per year. Continuing on page 8, entry age, adopting 7.0%assumption the impact to City funding would be about 5.6%of payroll or $66,000 per year. If you adopt salary scale assumption render entry age the City's cost would go down about 1.4%of payroll. If you adopt Turnover rates with entry age the City's cost would go down 1.4%of payroll. Finally under Normal Retirement Rates udder the entry age it's about. 1.5%of payroll lower. Combining the assumption under entry age but leave it at 7.5%investment the bottom line City dollar would be$587,125, The final scenario combining the assumption with 7.0% investment return, The City's fit riding would be$650,381 per year,and 53.9%of payroll. Member Heeb asked, is everyone Police Pension Board of Trustees Miuutcs-Quarlerly Meeting September 16,2013 Page 4 46 shitting to the entry age normal. Mr. Lozen stated yes, in regards to GAS13 25 the City will have to report $4,833,847 as the unfunded actuarial accrued liability for the 2014 evaluation. Mr. Lozen mentioned if you adopt the entry age normal basis and advise the board to lower the assumption by 7.25%,lie would be fine with that. Member Tarr made a motion to approve the percent ref payroll instead of dollar ammint;Member Leaf .seconded the motion, vvhich Passer!unanimously. Member Heeh made a motion to change from fi-ozen entry age to entry age:normal actuarial cost method; Meinber Tarr seconded the motion, which passed unanimously. Member Tarr made a motion to expect the combined assumption with 7.5%investment return; Member I eafseconded the motion, which passed tmaniinously. Mr. McKinney recommends to the board that you consider revising the 2012 valuation so that it becomes effected for October 1, 2013. Member Ifeeb made a motion to remised the 2012 valuation and atrthorize the p yment Qf$1,500.00; Member'Parr.seconded the notion, which passed unanimously. Mr. McKinney stated that once the evaluation becomes available that is provided to Mr. McKinney and Ms. Looney in order to have the proper percentages in place for the biweekly contributions. The 6ogdahn Group,Performance Consultant Quarterly report-.June 30, 2013 Jack Fvatt opened by discussing the Investment Performance Review for the 2"d quarter. On page 2, during the last quarter,domestic equity continues to have strong results. Unfortunately the international and fixed income markets have both had poor results. Mr. Evatt reported assets ended the March 31, 2013 {quarter at$6,944,825 and ended the June 30, 2013 quarter at$7,053,678.'I'lnis is a slightly positive:result Erom the overall plan. H. Lee Dehner, Plan Attorney Mr. Dchner opened with, Legislative update: Tallahassee, Senate Bill 534 was signed into the law which imposes on defined benefit plans in Florida causing additional filing and disclosure requirements, this will result in significantly increase administrative expenses to the plan. As of right now the bill will need to pass by 213 majority this did not, but is still being watched and not decided at this point. Mr. Deh.ner discussed another item, maintenance of confidentiality for police officer's personal indentifying information, Ch. 1 l9, Florida Slatum It is a request from the division that this document be signed by the City and maintained by the division for confidential information what is identified in Statute to be confidential. However,with respect to the City when someone comes in to the City Clerk's department for confidential information it can be denied without violating public record because the Statute is self executing with respect to the City. However with respect to third parties they have to receive this request in order for items to be kept confidential. Mr. Delnncr added with respect to conferences, there is a division of retirement conference Being held October 22nd, 23rd and 24"'located at the doubletree hotel at SeaWorld. Police Pension Boird of Trustees Minutes-Quarterly Meeling September 16,2013 Pugs 5 of 0 RATIFICATION of PROCESSED DISBURSEMEN'fSIRETURN OF CONTRIBUTIONS and DEPOSITS DISBURSEMENTS 1. Christiansen&Dehner, professional legal fees -$1,363.43 2. The Bogdahn Group, performance consultant fees, 2nd quarter, 2013 - $3,625.00 3. Dana Investment Advisors, Inc. - $5,205.50 4. Foster& foster, actuarial services- $7,120.00 5. Integrity fixed Income- $1,224.37, $1,611.24 6. DEPOSITS-none Member Tarr-made,a motion to approve the processed disbur-.sementsh-enwn of contributions and deposits;Member legfseconded the motion, which Passed unaninionsly by roll call. STAFF REPORTS,DISCUSSION,and ACTION/'T'RUSTEES' REPORTS,DISCUSSION and AC'T'ION; REQUESTS FROM TIIE PUBLICIEMPLOYEF.S PRESENT STAFF REPORTS Julie Christine, Board Coordinator Ms. Christine mentioned that the term for council appointed Member I-Iceb ended on May 21, 2013 and Mr. Hceb has still continued to remain on the board until a replacement is found. 'There are three potential volunteer police pension applications however; Iris Tyler recently pulled her application. So, the remaining two are Gary Conroy and Larry Brinson, Member Heeb stated that M-. Conroy is qualified but the problem is, there ends up being three nietnbers from the law enforcement community sitting on the board. Mr. Heeb spoke with Mr. Brinson and stated that he scans very excited about the possibility, lie has a strong background, he is a banker at Wells Fargo, and he thinks lie would be an excellent addition because he brings an outside prospective. Mr. Ilceb thinks it's healthy for the board to have citizens who are not involved with the pension plan. Member Tarr acknowledge that while Mr. Conroy was on the board previously there was a lot of money spent on his education to get him certified and does not think that Mr. Brinson has the certifications although does have the business experience. Member Tarr added that he would much rather have someone on the board who is already certified. Member Leaf agreed with Member'Tarr on having Mr.Conroy on the board. Chairman Arcieri stated it is hard not to take advantage of Gary's education and experience on the board and lie can't look at having another person who has law enforcement background on the board as a bad thing. Member Tarr's personally recommends Gary Conroy and stated it is nothing agenized Mr. Brinson. It just has to do with the education and experience from Gary. Chairman Arcieri and Member Leaf concur. Ms. Christine added there is an FPPTA Trustees' school coming up on September 29`h -October 2"d at Palm Beach Garden if any member would like to attend. TRUSTEES' REPORTS Member'Darr questioned the calculation of sick, vacation and overtime as it pertains to the added value of police officer's retirement. Has the state come through with maximum calculations for our final retirement plan? Lee Dclmer, Plan Attorney declared the Senate hill 1128 that was passed in 2011 stated there are limitations on the amount of unused sick, vacation and overtime pay. The maximum on overtime hours is 300 hours per year after the effective date for fiscal year or calendar year.Ms. Police Pension Board of Trustees Minutes-Quarterly Meeting Septenibo, 16,2013 Page 6 of G Looney stated she does not have documentation or communication relating to this and was wondering if we can get something. Ms. Looney asked does the Plan or[pity have to adopt this. Mr. Dehner stated this should be in the police union agreement and when the ordinance is adopted then that would be the effective date. Mr. McKinney stated that a memo should be sent to all three boards art([a conversation should be discussed between him, the City Manager, and Ms. Looney. EMPLOYEES PRESENT Mr. McKinney, Finance Director was provided the estimated premium for the fiduciary insurance which protects the board from errors and omissions, the estimated premium is $2,580.00. Mr. McKinney will be coordinating with Ferrell Jenne annually on the insurance because he can get it on a savings by lumping it with the City policy. Mr. McKinney needs the board content to do this. Mender Tarr made a motion for Mr. McKinney, Finance Director to acquired the insurance for an estimate amount of'$2,580.017; Member I eaf seconded the motion, ivhich t)assed unanhnously by roll call. ADJOURNMENT There was no further business, and the meeting was adjourned at 3:27 p.m. Respectfully Submitted: Approved: Donna Looney, Personnel.Directs vid /r.—iri, Chairman